Second Quarter of the Fiscal Year Ending March 31, 2018 Results Briefing Information Materials Entrust Inc.

Transcription

1 Second Quarter of the Fiscal Year Ending March 31, 2018 Results Briefing Information Materials Entrust Inc. Securities Code: 7191 The opinions and projections stated in these information materials reflect the judgments of the Company at the time these materials were prepared. No guarantee is provided for the accuracy of the information herein stated. Users are reminded that due to changes in various factors, actual business results can materially differ from business results projections.

2 1. Company Profile 2. Business Results for the Second Quarter of the Fiscal Year Ending March 31, Business Results Outlook for the Fiscal Year Ending March 31, Topics

3 1. Company Profile 1

4 Company Profile (as of September 30, 2017) Company name Date of establishment Capital Fiscal year Representative director Head office location Major branch offices Number of employees Business lines : Entrust Inc. : March 2006 : 1,027 million yen : 12 months to March : Yutaka Kuwabara : 1-4 Kojimachi, Chiyoda-ku, Tokyo : Akita, Toyama, Nagoya, Osaka, Okayama, Fukuoka Yokohama Solution Center : 87 : Comprehensive guarantee services 2

5 Business Lines Two business lines for meeting market needs and providing customized services Guarantee services Guarantee provision as a set of service and risk An extensive market of large companies Solution services Specialization in guarantees provided as a service 3

6 Revenue and Income Structure Stock-type business Level of stock-type revenue component fluctuation New revenues New revenues New revenues New revenues Renewals / running revenues Renewals / running revenues 23% 48% 54% 55.4% Stock revenues FY03/2015 FY03/2016 FY03/2017 Q2 FY03/2018 4

7 2. Business Results for the Second Quarter of the Fiscal Year Ending March 31,

8 Fiscal Year Ending March 31, 2018, Second Quarter - Business Results Highlights Higher revenues, strong income growth Business results developing favorably Ordinary income compared with the year-earlier period 47.6% Revenues Ordinary income Net income for the quarter 1,444 million yen 110.5% compared with the year-earlier period Key factors 398 million yen 147.6% compared with the year-earlier period 268 million yen 154.3% compared with the year-earlier period Solution services as growth driver (+32.5% compared with the year-earlier period) New insurance-desk business operations contributing to revenues Strong income growth mainly from cost curtailment through steady collection activities 6

9 Fiscal Year Ending March 31, 2018, Second Quarter - Performance Progress Results ahead of plan Ordinary Further gains in income ratio 27.6% productivity (Unit: million yen) Q2 FY03/2017 Q2 FY03/2018 Change from the yearearlier period Q2 plan Attainment ratio Projections for the full fiscal year (previous announcement) Progress Revenues 1,306 1, % 1, % 2, % Ordinary income % % % Ordinary income ratio Net income for the quarter 20.6% 27.6% +7.0P 23.3% % % % % Growth in guarantee services (attainment ratio 103.2%) and solution services (attainment ratio 101.3%) both faster than initially planned Ordinary income marking a historical high, reflecting steady revenue growth and effective cost control 7

10 Fiscal Year Ending March 31, 2018, Second Quarter - Revenue Breakdown by Service Solution services also developing favorably (Unit: million yen) 3,000 Guarantee services 2,500 1,816 1,414 Solution services 2,000 1,500 1, % 1, % % FY03/2016 Q2 FY03/2017 FY03/2017 Q2 FY03/ % Portfolio 8

11 Fiscal Year Ending March 31, 2018, Second Quarter - Number of guarantee contracts held at property rent payment guarantee operations Continuously growing number of guarantee contracts held Compared with Formation of platforms Q2 FY03/2018 Q2 FY03/2017 the year-earlier (Estimate) period (%) for stable growth (Contracts) 300,000 Solution services (FP) Number of contracts 245, , % 250,000 Guarantee services 200, ,000 Average annual growth rate 21.8% Q2 FY03/2015 Q2 FY03/ ,000 50,000 0 Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Q2 FY03/2015 Q2 FY03/2016 Q2 FY03/2017 Q2 FY03/2018 9

12 Fiscal Year Ending March 31, 2018, Second Quarter - Achievements in the introduction of medical care and eldercare expense guarantee operations Accelerating the market development in the growth areas of medical care expense guarantees and eldercare expense guarantees Medical institutions [Cooperative agreements] Eldercare facilities [Cooperative agreements] 80 medical facilities 128 eldercare service providers [229% compared with the year-earlier period] [158% compared with the year-earlier period] 18,150 hospital beds [228% compared with the year-earlier period] (as of September 30, 2017) 10

13 3. Business Results Outlook for the Fiscal Year Ending March 31,

14 Fiscal Year Ending March 31, Business Results Projections Full-term business result projections upwardly revised on steady revenue growth and further productivity gains (Unit: million yen) FY03/2017 (Results) FY03/2018 (Previously announced projections) Change from the previous fiscal year FY03/2018 (Projections after the latest revision) Change from the previous fiscal year Revenues 2,713 2, % 3, % Ordinary income % % Ordinary income ratio 22.0% 22.4% +0.4P 26.2% +4.2P Net income for the quarter % % Key factors Guarantee services and solution services growing faster than originally planned Productivity gains mainly from cost curtailment through steady collection activities Additional income expected at the Yokohama Solution Center to be taken into full operation this December 12

15 Fiscal Year Ending March 31, Dividend Projections Dividend projections revised based on favorable current business results and projections for future business results Interim dividend FY03/ yen FY03/ yen FY03/2018 (Previous announcement) (Latest announcement) 4.0 yen Year-end dividend 8.0 yen 6.0 yen dividend per share of common stock 2.0 yen commemorative dividend 4.0 yen 6.0 yen Dividend total 8.0 yen 8.0 yen 10.0 yen Payout ratio 17.4% 20.7% 20.4% Net income per share yen yen yen PER (as of October 30, 2017) times 26.8 times 13

16 Fiscal Year Ending March 31, Major Developments Ahead (1) Property rent payment guarantee services: Market environment responsive action Demographic aging Helping through the provision of guarantee schemes to answer public calls for the provision of rental properties for seniors - Sales of new products with occupant safety monitoring features For rental residences for seniors managed by Daiwa Living Co., Ltd., guarantee schemes are being offered since August 2017 Revision of the Civil Code High likelihood that institutional guarantees (by property rental guarantee companies) will become usable under the provisions of the revised Civil Code regulating debt relationships promulgated June 2, 2017 Current Contract documents have no set guarantee limit amount Co-signers and tenants are thought to incur the same liability both for unpaid rent and for repair costs, etc., for property damage negligently caused by tenants Future Guarantee limit amounts must be clearly stated As the scope of co-signer liabilities becomes clear, it is expected that more people will seek to avoid becoming a co-signer. 14

17 Fiscal Year Ending March 31, Major Developments Ahead (2) Solution services: Development of additional operations Providing all types of industries with unique specialized business support services derived from guarantee services This message reaches you from [_] Bank. We would like to remind you that a debit to your account will be forthcoming. The debit date is [month] [day]. Please be sure to maintain a sufficient account balance on that date. SMS-based solution services ("Doc-on service") Call-center functions Payment / remainder notice function Settlement function (patent application pending) Consulting and operations ("C&O") business Screening services Investigative visits Contract management services Legal action support Collecting agency Delinquency management Unpaid items information Insurance desk Insurance knowledge and know-how Infallible personal information management (EMS system) Operations in conformity with compliance requirements Finance (Banking, insurance, credit card companies) Telecommu nications and electronic commerce Educational institutions Temp agencies Hospitals Eldercare facilities Real estate 15

18 Fiscal Year Ending March 31, Major Developments Ahead (3) Growth areas: Medical care expense guarantees and eldercare expense guarantees Medical care field Eldercare field Changes in the accounting systems of medical care companies raise demand for medical care expense guarantees External audits of hospitals to be made compulsory Start in fiscal years beginning on or after April 2, 2017 Problem of uncollected medical care expense payments causing deterioration in hospitals' financial viability Annual uncollected payments of around 21.9 billion yen Survey of current conditions conducted in 2005: Aggregate uncollected payments of hospitals enrolled in the Council of Four Hospital Organizations Establishment of a deliberation council at the Ministry of Health, Labor and Welfare The need for medical care expense guarantees has been surging. Demand for special services such as dunning and collection is also set to rise. Eldercare facilities experience a rising need for guarantee services Dealing with demographic aging in Japan Objectives of the Ministry of Land, Infrastructure, Transport and Tourism: In the 10 years from 2010, creation of 0.6 million residences with services for seniors (Sakoju) 700, , , , , , ,000 0 Sakoju Number of units Sep Sep Sep September 30 around 0.22 million units Sep Sep Sep * Prepared from data released by the registration secretariat for "Serviced residences for seniors" Goal 0.6 million units

19 Fiscal Year Ending March 31, Illustration of future growth New businesses anticipate market needs Creation of nextgeneration markets Guarantee business Launch of diverse business types Eldercare expense guarantees Medical care expense guarantees Solution services Property rent payment guarantees Expansion of sales routes in new markets Original growth drivers of the Company Key platforms for growth Potential of the guarantee business pioneered by comprehensive guarantee services company Entrust 17

20 4. Topics 18

21 Fiscal Year Ending March 31, IR Topics Date IR Topics April 11 May 30 June 13 July 28 August 1 Medical care expense guarantee product "Rainbow" - Adopted by Kagoshima University Hospital - Co-signer agency service in order to resolve the hospital's problem of uncollected medical care expenses Expanding corporate customers signing up for the insurance desk solution service - Initiation of service provision to Daiwa Living Co., Ltd. - Lifting the burden of insurance solicitation operations from real estate management companies following the revision of the Insurance Business Act. Cooperative arrangement in the field of eldercare expense guarantees with Japan Life Design Corporation of the KOYAMA Healthcare Group Cost reductions from lower delinquency risk and obviation of co-signer procedures Institutional guarantees of co-signers have become more widespread following the revision of the Civil Code Medical care expense guarantee product "Rainbow" - Adopted by Hyogo Prefecture Kato City Hospital - The first adopter among city hospitals Start of the provision of "D-SUPPORT SS" to Daiwa Living Co., Ltd. as a property rent payment guarantee product for senior tenants developed by the Company Guarantee scheme contributing to promoting the provision of rental housing for seniors. September 6 September 19 Commissioned with new business by Daiwa Living Management Co., Ltd. surrounding tenant application operations. Established the Yokohama Solution Center for the service provision of rapidly growing consulting and operations ("C&O") services and insurance desk services. Seventh and largest of operating sites with enough space for 100 staff members. Medical care expense guarantee product "Rainbow" adopted by Yamanashi Prefectural Central Hospital as a guarantee scheme to resolve the problem of uncollected medical care expenses 19

22 Entrust, the comprehensive guarantee service company, contributes to the future of Japan through its guarantee schemes. Entrust Inc. 20

23 The numerical business results projections stated in these materials are based on judgments and expectations derived from the information available at the time. The materials have been prepared based on numerous assumptions and perceptions obtained from information that includes risks and uncertainties. Users of these materials are reminded that owing to a diversity of factors actual business results can materially differ from business results projections. Factors that have the potential to affect actual business results include, without limitation, deterioration in the business environment or economic conditions, trends surrounding laws, regulations, and related rules, and unfavorable rulings in litigation. Contact for inquiries: General Affairs Department, IR/PR Manager info@entrust-inc.jp 21